The repeal on the 1st January, 1994 of The Immovable Property (Acquisition by Foreign Persons) Act drew a sigh of relief from many attorneys and real estate agents. For years, these professionals had complained that the Act made the acquisition of land in The Bahamas by foreign persons cumbersome and that it acted as a deterrent to legitimate investment.

Registration

The International Persons Landholding Act 1993 encourages foreigners or companies owned by them to purchase a second home in The Bahamas as this area was thought to have the most significant potential. If a foreigner acquires a single family dwelling or vacant land to be used in the construction of such a dwelling then he no longer need obtain a permit from the Government (specifically the Investments Board) prior to the purchase. He need only register the acquisition subsequently with the Investments Board.

Permanent residents of The Bahamas and foreigners who inherit property in the Bahamas are now treated more kindly. In neither case are they to obtain a permit before acquiring land but must merely register subsequently.

Permit

The foreigner will require a permit however if (1) the property is undeveloped land and of five acres in size or larger, or (2) the property is not a private residence, or it is not intended for development as such.

Failure to obtain a permit will render the acquisition null and void but the foreigner will be entitled to recover all monies paid in consideration of the acquisition less any legitimate deductions. If a permit has been granted for the acquisition of land and the intended usage changes then the permit must be varied by the Board otherwise it will be invalid.

A registration certificate or permit must be included along with title documents to be recorded in the Registrar General's Office otherwise the recording will be null and void.

Mortgages

The new act is not intended to be a stumbling block for legitimate credit transactions. It provides that licensed banks, trust and insurance companies who acquire an interest in or take possession of property under a Court Order must register that acquisition or fact of possession. Acquisition by way of foreclosure under a mortgage or of land acquired by an authorized foreign state will not require a permit but must be registered.

Leases

Foreigners are not required to obtain permits, register leases or letting agreements unless they are for trade or business purposes and the term can exceed 21 years.

Incentives

In line with its policy of actively encouraging foreign investment, the government has included in this Act a provision that a foreigner no longer pays a double rate of stamp duty. He now pays the same single rate as a Bahamian.

Furthermore, a foreigner who owns a home in the Bahamas may now obtain an annual home owner resident card upon application and payment of a fee to the Director of Immigration. The Card authorizes the entry of the holder and his immediate family. Their stay in the Bahamas is authorized provided there are no restrictions for policy reasons or under the Immigration Act.

Schedule of Fees

Application for registration - $25.00

Application for permit - $25.00

Certificate of registration:

(a) the value of the property is $50,000 or less - $50.00

(b) the value of the property is over $50,000 but under $101,000 - $75.00

The usual practice in the Bahamas is for the tax to be shared equally between buyer and seller, unless otherwise agreed upon.

Real Property Tax

The statutes provide for a general assessment of real property by the Chief Valuation Officer of the Commonwealth of The Bahamas. This applies to Bahamians and non-Bahamians owning real property in The Bahamas not exempt from taxation as indicated in "Remarks". "Bahamian" is defined as a citizen of The Bahamas or as a company registered under The Companies Act in which at least 60% of the shares are owned beneficially by Bahamians. The returns are due on or before December 31 each year and must be filed with The Chief Valuation Officer of the Commonwealth of The Bahamas. Owners are required to file a Declaration of Real Property.

The return must be signed by the owner and witnessed by an "authorized person", defined as a magistrate, attorney, registered medical practitioner, bank officer, minister of religion, justice of the peace or notary public within The Bahamas or similar person outside the Commonwealth. Such forms may be obtained from the Chief Valuation Officer. Property is assessed before October 15. The Chief Valuation Officer may, if it appears that any property subject to assessment has not been assessed, within the next 10 years, assess the property. The Chief Valuation Officer is also required to publish before October 15, (once in The Gazette and once in a daily newspaper published and circulated in The Bahamas), a notice, stating:

Copies of the assessment lists are available to the public at the Treasury and office of the Chief Valuation Officer;

Assessment notices for each owner of property liable to tax are available at places specified in the notice;

Five days after the notice's publication, a notice of assessment is deemed served on every owner of property subject to tax;

A notice of assessment may be sent by mail to any owner of property by the Chief Valuation Officer after publication in The Gazette;

Any other matters which the Chief Valuation Officer, with the Minister's approval, deems necessary.

Objection to a notice of assessment must be made in writing to the Chief Valuation Officer, within 30 days of service of the notice, stating grounds upon which the objection is made. The Chief Valuation Officer may request that the tax levied be paid in whole or in part at the time of objection.

Taxes are due within 60 days of the date on which the assessment notice is deemed to have been served. Also, payment of one or more quarterly installments must be made within those 60 days. These payments should be made to the Public Treasury in Bahamian or US dollars, preferably as a bank draft or international postal order. Personal cheques are not acceptable.

Rates of Taxes

In respect of owner-occupied property:

The first $250,000 of market value is tax exempt

More than $250,000 and not exceeding $500,000 of market value is .75%

More than $500,000 and not exceeding $5,000,000 of market value is 1%

More than $5,000,000 of market value is .25%

In respect of unimproved property other than unimproved property exempt by virtue of Section 39 of the Real Property Tax Act:

First $7,000 of market value is $100

More than $7,000 of market value 1½%.

In respect of any other property:

First $500,000 of market value is 1%

More than $500,000 of market value is 2%

Market Value is defined as the amount the property would realize, if sold in the open market, without any encumbrances or restrictions. If the return is not filed, the owner is guilty of an offense, and upon conviction thereof, may be fined up to $3,000. Persons knowingly making false statements may be liable upon conviction to a fine of up to $3,000 or six months imprisonment, or both fine and imprisonment. If the tax is not paid on or before the last day the tax becomes due, a 10% surcharge is added.

In the case of an extension of time, the Chief Valuation Officer may postpone the date on which the tax is payable in a particular case, by notice in writing.

Exemptions

Property owned by Bahamians and situated in the Family Islands is exempt from property tax. Property approved as commercial farm land (by the Ministers of Agriculture, Trade and Industry and Finance) is eligible for property tax exemptions.

Also exempt from property tax are:

Unimproved property owned by Bahamians, meaning property without physical additions or alterations, or any works benefiting the land which have not increased the market value thereof by $5,000 or more;

Places of religious worship; school buildings and their gardens and playing areas;

Property owned by foreign governments;

Property owned by foreign nations used for consular offices or residences of consular officials and employees;

Property used exclusively for charitable or public service from which no profit is derived.

Rental homes that apply for a hotel license.

Rules Governing Sales

GROSS PRICES: A price given to a broker by an owner shall be deemed to be gross and the broker shall charge the regular commission on such price.

NET PRICE: Acceptance of net listings by brokers is not allowed.

WHEN COMMISSION IS EARNED: A commission on a sale is earned and payable when, through the agency of the broker, the minds of a seller and a buyer have met on the terms of sale, as evidenced by a cash deposit or written agreement.

BUYING REAL ESTATE: The same commission rates and rules which apply to sales apply to purchases in which a broker is employed to purchase property, and the broker shall collect a commission based on the total cost to the purchaser if he or she is authorized to buy property at public auction, forced sale or private sale (Article 13, part 2, Code of Ethics).

OPTIONS TO BUY PROPERTY SECURED BY BROKER: If a consideration, cash or otherwise, has been paid for an option arranged by a broker and the option is not exercised, the broker shall charge the principal granting the option one-half of the consideration received, but in no event shall this amount exceed the sales commission to which the broker would have been entitled had the option been exercised. If a broker is engaged by a prospective purchaser to secure options, the broker shall have an agreement in advance for compensation by the prospective purchaser, and he or she shall charge compensation accordingly, whether the options are exercised or not the same commissions rules and customs which apply to exchange.

EXCHANGE OF REAL ESTATE: Commission shall be paid by each owner on full sales price of each property and shall be stated in the exchange contract.

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